Answer from City: What was the municipal bond interest rate assumed in the projections?

The interest rate that has been included in the estimates that the City has run is 5.5%.  This rate was estimated by Public Financial Management, the City’s financial advisor.

This is a conservative rate and was used for the following reasons:

1.       As we will be issuing 3 times over a 5 year period estimating what interest rates will be in 2015,  2017 or 2019 is difficult and consequently a conservative rate is prudent.

2.       This rate is an estimate for use in discussing the program. The final rate for each issue will be determined by the market at the time of issue.

3.       Each issue will be sold for the most advantageous rates that can be obtained at the time of issue.

4.       The ballot question asks for approval of a total amount of debt and the debt service for each issue will be determined by the marketplace rate at the time of issue.